Tuesday, June 26, 2012Last Update: 2:42 PM PT

Lawyers Smack Kohl's Over Zooey Deschanel Lawsuit

(CN) - Kohl's Department Stores owes more than $600,000 to attorneys who claim they reduced Kohl's settlement amount by $1.6 million in actress Zooey Deschanel's lawsuit over Kohl's line of Zooey Shoes, according to a new complaint in Los Angeles Superior Court. In a 2010 lawsuit, the "New Girl" actress said that shoemaker Steve Madden owed her $2 million in an endorsement deal that would use her name and likeness on Zooey shoes and accessories. In August 2011, Kohl's hired law firm Sheppard, Mullin, Richter & Hampton to defend it against Deschanel's lawsuit, according to the current complaint Sheppard Mullin. Sheppard Mullin says Kohl's replaced its prior counsel because Sheppard Mullin "would be better qualified to handle" the serious risks posed by Deschanel's lawsuit, such as the possible exposure to other, similar lawsuits over Kohl's use of celebrity names like Cher and Madonna for other shoe lines. Sheppard Mullin says it sent Kohl's an explanation of its fees, but it had to act fast due to pending issues, so there was no time to wait to put the agreement in writing. But Sheppard Mullin says Kohl's orally agreed to Sheppard Mullin's rates, the lawsuit states. Sheppard Mullin says it worked steadily over the next few months, racking up more than $600,000 in legal fees. During mediation in early October, Deschanel demanded $1.7 million to settle the lawsuit. But the tide turned in Kohl's favor due to the firm's diligent efforts, particularly in resolving discovery battles and identifying experts, the firm claims. At the end of October, Deschanel agreed to settle all claims for $100,000. The firm claims it executed the settlement in December. But Kohl's allegedly failed to pay the firm on the invoices for August through November. Kohl's rejected the invoices and disputed the fees owed, criticizing the firm for preparing for trial and doing work that Kohl's claimed its prior counsel had done, according to the complaint. Kohl's allegedly claimed the fees were disproportionate to the value of the case, but Sheppard Mullin claims Kohl's used the $100,000 settlement to value the case, ignoring the fact that it could have had to cough up the original 1.7 million demand, plus sanctions and exposure to other possible lawsuits, according to the complaint. Sheppard Mullin claims that Kohl's refused to resolve the fee dispute through arbitration. On May 16, Sheppard Mullin formally demanded just over $628,000, which included interest as of that date on the principal owing. Sheppard, Mullin, Richter & Hampton is represented by Finley Taylor and Jessica Johnson of Sheppard Mullin's Costa Mesa, Calif. office.